Benton Harbor's finances under review

December 02, 2009|By JOHN PAUL WSBT-TV Report

BENTON HARBOR — Benton Harbor may be a city on the move, but on the streets, there are signs that tell a different story. Vacant buildings, sidewalks that aren't frequently traveled on and a number of "for sale" signs are found alongside construction barrels and the busy Business 94 corridor. The city also has a $2 million deficit. Its financial shape is getting the attention of state officials from Lansing. By phone, Terry Stanton said under Public Act 72, there are 14 triggers that can be tripped to begin a preliminary review for a local government's finances. In this case, it was Benton Harbor's former city manager who made the request that the city's finances be reviewed. Treasury staff went to work inside City Hall. Their overview would look at revenues and expenditures, and accounting and budgeting practices. They found several issues in Benton Harbor, including fund deficits, accumulated deficit spending — which means, the city spent more than it took in for a period of years. The report also found improper reliance on interfund borrowing, which means the city borrowed money from funds when it should not have. Internal control deficiencies, and failure to distribute property taxes and submit payroll taxes in a timely manner, were among the issues found. WSBT News went to the mayor's office Tuesday morning for comment. We were told he was out of the office until the afternoon. He did not return our phone calls, either. Benton Harbor is not alone. Three Oaks, Mich., also had the state intervene in its finances. A financial manager was put in place there. While numbers are consistent when compared with 2008, the state treasury department has been quite busy this year. "No doubt there have been a number of reviews this year," said Stanton. While the uptick is being blamed on the recession and a drop in revenues, the board will get to work and find solutions to ensure this budget deficit won't soar over the city much longer. The board has been given 60 days to report its findings. A onetime 30-day extension may be given. Watch WSBT-TV Report